The fossil dubbed Aurornis or "dawn bird," found in a slab of shale in fossil beds in Liaoning Province, is about 160 million years old, they said.
The finding has led to an extensive analysis of how the many bird-like creatures living in Jurassic and Cretaceous times were related to each other, which in turn has restored one of the most famous fossils ever found to the bird lineage, the BBC reported Wednesday.
Archaeopteryx, dubbed "the first true bird" when the first fossil specimen was identified in the 19th Century, was reclassified recently as a non-avian but bird-looking dinosaur as a result of new finds of feathered creatures in Liaoning.
But Archaeopteryx, which lived around 150 million years ago, could clearly fly, showing it was not just a dinosaur that merely shared some bird features, researcher said.
The new findings allowed an extensive analysis based on a detailed comparison of features between Archaeopteryx and Auronis, they said.
"So it's a much bigger and more robust analysis, and according to this new investigation Archaeopteryx is again considered an ancestor of birds and the new creature we describe is also a basal bird; and in fact it is even more primitive than Archaeopteryx," lead study author Pascal Godefroit from the Royal Belgian Institute of Natural Sciences said.
The finding give new insights into evolution around the time of bird origins, including birds themselves and a number of dinosaurs that were almost but not quite birds, researchers said.
"There is a really grey, wobbly line between the two," Paul Barrett from the Natural History Museum in London said. "Just one or two changes across a huge body of data can make the difference between an animal being on one side of this bird-dinosaur divide or the other."
2014: The Year in Music [PHOTOS]